What Are the Differences Between Bread Routes and Amazon DSPs?
Amazon Delivery Service Providers (DSPs) and Bread Distribution Routes represent two different business models, although both are in the last-mile delivery space.
Wondering which option might be best for you? Here’s a breakdown of the primary differences:
1. Business Models - How does route ownership work?
Bread Route owners own the rights to a delivery territory from a bakery brand (such as Flowers, Bimbo, or Pepperidge Farm). Products are bought wholesale and sold to retail grocery stores, gas stations, schools, etc. Income depends on sales volume and upon relationships with client accounts. The route is owned as an asset and can be resold later.
Amazon DSPs are contracted to Amazon, who assigns the daily packages and routes. Revenue is tied to contracts with Amazon, not directly to consumers. As a contractor, Amazon DSPs manage drivers, payroll, trucks, and operations, but don’t own the Amazon routes or the Amazon brand.
2. Revenue & Growth Potential - How much money can I make from a Bread Route or Amazon DSP?
Bread Route revenue can vary depending on the accounts in a given territory. Per-route revenue can range from $55,000-$160,000. There are opportunities to grow the business in your territory by adding stops or increasing product placement. Margins (EBITDA) tend to exist within the 60%-90% of net revenue range due to the minimal overhead of this business model.
Revenue per route is fairly predictable in the Amazon DSP space - around $136,000-$168,000 per route. Growth does have a cap, however - Amazon decides if you can add more routes or expand your fleet. Additionally, high operational costs (like trucks, staff, and insurance) can contribute to a reduction in overall revenue. Margins (EBITDA) for Amazon DSP routes are about 10%-25% of revenue.
3. Financing & Equity - How do I buy a route-based operation like a Bread Route or Amazon DSP?
Bread routes can typically be financed. A down payment is generally required at 10%-20% of list price, and bread routes can be financed directly through the bakery companies, instead of through a traditional bank. These routes are considered an “asset purchase,” so there is resale value.
Amazon DSP routes typically require 100% cash investment upfront. There’s typically no bank financing for DSP acquisitions. Additionally, there’s no equity ownership for DSPs in the Amazon brand, so there can be a higher overall barrier to entry into the DSP space.
4. Profits & Route Sizes - Are Bread Routes or Amazon DSP routes profitable?
Profit ranges vary widely for both Bread Routes and Amazon DSPs, partially due to the variable difference in operation sizes across both route ownership options.
For Bread Routes, the profit range for a single route is about $40,000-$100,000+ annually.
For Amazon DSP territories, which average 20-40 routes, the profit range is $30,000-$300,000+ annually.
5. List Prices - How much does it cost to own a Bread Route or Amazon DSP?
The median price for a single bread route is around $100,000, with list prices ranging from $40,000-$350,000.
The media price for an Amazon DSP route package is higher, at $1,000,000. List prices range from $350,000-$3,000,000.
6. Operational Control / Owner’s Time Commitment - What type of time commitment is owning a Bread Route or Amazon DSP?
Bread Route owners can live farther away from their route territories, as long as they have a clear plan for operations, including driver support, fleet maintenance, and merchandising support. These routes tend to be more hands-on initially: owners often handle deliveries and relationship building with customers themselves, at least to start. After momentum and operations have been established, bread route owners can set their schedules and hire helpers - or run solo. There’s more flexibility in this space, but less support.
Amazon has stricter compliance and operational requirements. DSPs must live within an hour of their assigned station, for example. Additionally, owners are required to maintain full-time operational oversight. This includes managing staff, compliance, scheduling, and Amazon’s KPIs. Furthermore, those KPIs, package volume, and delivery metrics are all dictated by Amazon.
Which type of route-based operation is right for me?
Here’s a handy side-by-side comparison chart detailing the primary differences between Bread Routes and Amazon DSPs:
Side-by-Side Comparison: Amazon DSP vs. Bread Distributor (One Route)
To Summarize:
Bread Routes offer more flexibility, with asset value, customer relationships, and entrepreneurial upside
Amazon DSPs have more predictable revenue, but less independence and additional compliance requirements
How Can I Learn More About Bread Routes?
Bread routes and Amazon DSP routes offer different opportunities within the last-mile delivery industry. Understanding the differences and similarities in operations, relationship with the company, vehicle requirements, schedules, and financial considerations is crucial in determining which route type aligns best with your goals and capabilities. Whether you prefer the structure of Amazon DSP routes or the flexibility and customer-oriented approach of bread routes, both can provide rewarding entrepreneurial experiences.
You can learn more about logistics routes and business opportunities through our Bread Routes 101 e-course. Join now to get started on your educational journey into logistics.
